Economic and Political Overview

flag Uruguay Uruguay: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

The Uruguayan economy is significantly dependent on its neighbors, Brazil and Argentina. The country showed strong resilience during the Covid-19 pandemic and returned to its pre-pandemic level by mid-2021. After growing by 4.9% in 2022, economic activity decelerated to an estimated 1% in 2023 amid tighter financial conditions and the impact of a historic drought that affected agricultural production. In 2024, GDP growth is expected to be bolstered by the resurgence of exports and private consumption. The IMF forecasts growth at 3.3% this year and 2.9% in 2025.

Uruguay undertook significant structural fiscal consolidation during the period of 2020-2022, guided by amendments to the fiscal rule implemented in 2020. In 2023, the fiscal environment has been challenging due to the drought's impact, the reversal of real wage declines in previous years, and the government's tax reduction measures. The IMF estimated that the central government deficit expanded to 2.9% of GDP in 2023, up from 2% one year earlier, but it should gradually decrease to 2.3% by 2025. In April 2023, Congress endorsed a pension reform that, despite featuring long transition rules, will not yield fiscal savings for several years. Nonetheless, this reform stands as a robust testament to fiscal responsibility and enhances the long-term sustainability of the system. General government debt increased to 61.6% of GDP at end-2023 and is expected to remain stable over the forecast horizon. The foreign-currency debt ratio has dropped below 50%, indicating the government's continuous commitment to de-dollarizing the debt structure through a focus on domestic financing sources. Nevertheless, the ratio remains elevated. According to the National Institute of Statistics, the accumulated inflation during the year 2023 totaled 5.11% (compared to 8.3% one year earlier), falling within the target range established by the Central Bank of Uruguay (BCU), which was set between 3% and 6%. The IMF forecasts inflation at 5.9% this year and 5.5% in 2025.

The unemployment rate increased to 8.1% in 2023, from 7.9% one year earlier, and should remain stable in the medium term (IMF). Uruguay has one of the highest levels of GDP per capita in South America and a developing middle class (USD 28,851 in 2022, as per the World Bank). The country has had strong political and social stability for years, backed by a consolidated democracy and strong legal security, which makes it attractive to investors. Furthermore, the population living below the poverty line has decreased significantly in the past decade: at present, the percentage of households residing in poverty stands at 6.4%, as measured by the international poverty line of USD 6.85 per capita per day (World Bank).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 70.1777.2482.6186.2990.11
GDP (Constant Prices, Annual % Change) 4.70.43.72.92.6
GDP per Capita (USD) 19,73721,65723,08824,04425,033
General Government Balance (in % of GDP) -2.0-2.4-2.6-2.3-2.1
General Government Gross Debt (in % of GDP) 60.360.361.962.262.3
Inflation Rate (%) 9.15.95.85.55.2
Unemployment Rate (% of the Labour Force) 7.98.38.18.08.0
Current Account (billions USD) -2.79-3.03-3.01-2.73-2.55
Current Account (in % of GDP) -4.0-3.9-3.6-3.2-2.8

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Uruguay’s natural resources are very limited, mainly due to the country's size. There is a significant mining industry in the country, which mainly revolves around basalt, dolomite, limestone, quartz, granite, and marble. There is only one gold-producing mine in Uruguay, and the country is a major producer of cement and semi-precious stones, particularly agate and amethyst. Even though only around 11.6% of the land is arable, agriculture is the largest export sector in Uruguay. It accounts for 7.3% of the GDP and employs 8% of the active population. Uruguay has rich agricultural land and almost 90% of it is devoted to livestock breeding (cattle, sheep, horses, and pigs). Rice is the main crop, followed by wheat, maize, sugar cane, soybeans, and tobacco. Vegetable and fruit farming are also present throughout the country, as well as a prominent wine industry along the coast of the Rio de la Plata. In 2023, Uruguay's main export product was once again beef, accounting for 18% of the total exports. Sales amounted to USD 2.08 billion, 19% less than in 2022 (official governmental data).

The industrial sector contributes to 17.6% of the country's GDP and employs 18% of the active population. Agriculture and animal food processing account for half of the industrial activity. Other manufacturing activities include beverages (especially wine), textiles, construction materials, chemicals, oil, and coal. Additionally, Uruguay has recently invested heavily in the paper industry, which is expanding. The manufacturing sector as a whole is estimated to account for 10% of GDP. Uruguay's manufacturing industry production increased on average by 0.6% throughout 2023 compared to the previous year, driven by the manufacturing of paper and food, as reported by the National Institute of Statistics (INE). The divisions with the highest negative impact on the annual average were "Petroleum Refinery," with a decrease of 30.9%, and "Manufacture of Motor Vehicles," with a decline of 16.8%, resulting in negative impacts of 1.8 and 0.6 percentage points, respectively.

The services sector contributes to 63.2% of the GDP and employs 74% of the active population, mainly in finance and tourism. Particularly, the region around Punta del Este attracts a large number of visitors, which has driven the rise in building, leading to a construction boom in the area in recent years. The country welcomed 3.83 million tourists in 2023, marking a 55.5% increase year-on-year (data Ministry of Tourism). The structure of Uruguay's financial system comprises two public banks, nine private banks, and a diverse array of non-banking institutions.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 8.4 18.9 72.6
Value Added (in % of GDP) 7.3 17.6 63.2
Value Added (Annual % Change) -2.9 1.8 6.4

Source: World Bank - Latest available data.

 

Find more information about your business sector on our service Market Reports.

 
 
Monetary Indicators 20162017201820192020
Uruguayan Peso (UYU) - Average Annual Exchange Rate For 1 MUR 0.850.830.910.991.07

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
69,3/100
World Rank:
44
Regional Rank:
4

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

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Foreign Trade in Figures

Uruguay has an open economy, with foreign trade representing 57% of its GDP, according to the World Bank's latest available data. In 2023, the ranking of exported products was led by beef, constituting 18% of the total exports. Cellulose held the second position with a comparable share, followed by dairy products, beverage concentrates, rice, meat by-products, wood, soybeans, and vehicles. The largest import category in 2023 was industrial supplies, accounting for 28% of the total, followed by vehicles and their parts (17%), and food and beverage (14%).

Uruguay's main export partners in 2023 were China, Brazil, the EU, the U.S., and Argentina. Other relevant export destinations included Turkey, Mexico, Chile, and Paraguay. In terms of imports, they mainly came from Brazil, China, the EU, and Argentina. Uruguay is a founding member of MERCOSUR and a member of ALADI, a trade association that includes ten South American countries as well as Cuba, Mexico, and Panama. Uruguay enjoys special preferential access to trade with several countries under ALADI’s Economic Complementation Agreements.

As Uruguay mainly exports agricultural products, they are highly vulnerable to international price fluctuations. In 2023, imports of goods, excluding petroleum, derivatives, and energy, decreased by 2% compared to 2022, while exports declined by 13% compared to the previous year, which was a record year for exports. Service exports, on the other hand, totaled USD 6.07 billion in the twelve-month period ending in September 2023, with tourism exports rebounding.

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 8,2467,56410,32012,97312,486
Exports of Goods (million USD) 7,6806,8649,53511,1849,193
Imports of Services (million USD) 4,7513,5283,9235,4516,021
Exports of Services (million USD) 5,3573,7293,7465,4736,397
Imports of Goods and Services (Annual % Change) 1.3-12.218.212.5n/a
Exports of Goods and Services (Annual % Change) 4.6-16.311.711.1n/a
Imports of Goods and Services (in % of GDP) 21.720.823.925.9n/a
Exports of Goods and Services (in % of GDP) 27.825.230.531.3n/a
Trade Balance (million USD) 3,1132,1534,4733,452n/a
Trade Balance (Including Service) (million USD) 3,7242,4284,4863,784n/a
Foreign Trade (in % of GDP) 49.646.054.457.2n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
China 21.5%
Brazil 15.0%
Argentina 8.1%
United States 6.2%
Netherlands 2.6%
See More Countries 46.6%
Main Suppliers
(% of Imports)
2022
Brazil 19.9%
China 18.1%
United States 15.8%
Argentina 11.5%
Nigeria 2.9%
See More Countries 31.8%

Source: Comtrade, Latest Available Data

 
 

Main Products

11.2 bn USD of products exported in 2022
Meat of bovine animals, frozenMeat of bovine animals, frozen 19.0%
Soya beans, whether or not brokenSoya beans, whether or not broken 17.2%
Wood in the rough, whether or not stripped of bark...Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared (excl. rough-cut wood for walking sticks, umbrellas, tool shafts and the like; wood in the form of railway sleepers; wood cut into boards or beams, etc.) 6.0%
Milk and cream, concentrated or containing added...Milk and cream, concentrated or containing added sugar or other sweetening matter 5.6%
RiceRice 4.4%
See More Products 47.9%
13.0 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 12.8%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.7%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 2.7%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 2.7%
Mineral or chemical nitrogenous fertilisers (excl....Mineral or chemical nitrogenous fertilisers (excl. those in pellet or similar forms, or in packages with a gross weight of <= 10 kg) 2.6%
See More Products 75.5%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import-Export Flows.

 
 

Main Services

8.1 bn USD of services exported in 2022
49.71%
21.53%
12.04%
7.90%
3.48%
2.63%
1.01%
0.78%
0.64%
0.28%
5.0 bn USD of services imported in 2022
31.65%
27.48%
19.82%
7.28%
3.67%
2.65%
2.27%
2.20%
2.05%
0.89%
0.03%

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Official list of ministries and links
Ministry of Economy and Finances (in Spanish)
Ministry of Foreign Affairs (in Spanish)
Ministry of Industry, Energy and Mining (in Spanish)
Ministry of Transport and Public Works (in Spanish)
Ministry of Social Development (in Spanish)
Statistical Office
National Institute of Statistics (in Spanish)
Central Bank
Central Bank of Uruguay
Stock Exchange
Uruguay Stock Exchange (in Spanish)
Search Engines
Uruguay Total
LoGratis
Google Uruguay
Red Academy of Uruguay
Economic Portals
Brecha

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Political Outline

Current Political Leaders
President: Luis Lacalle Pou (since March 1st, 2020)
Vice President: Beatriz Argimón (since March 1st, 2020)
Next Election Dates
Presidential: October 2024
Chamber of Senators: October 2024
Chamber of Representatives: October 2024
Main Political Parties
Uruguay has a multi-party system with three dominant political coalitions. Outside of these coalitions, it is extremely difficult for any other political party to achieve electoral success. The dominant political forces are:

- Broad Front (FA): centre-left; maintained majority since 2009; broad coalition of 21 groups, including the Movimiento de Participación Popular (MPP), the Partido Socialista (PS), and the Vertiente Artiguista (VA)
- National Party (PN): conservative party, nationalist, liberal, also referred to as the "White Party"
- Open Cabildo (Cabildo Abierto): right-wing, populist, conservative
- Ecologist Radical Intransigent Party (PERI): centre to centre-left, green politics, liberal
- Colorado Party: centre-right, a liberal and social-democratic party, the most elected party in Uruguayan history
- Independent Party (PI): centre, a social democratic and Christian socialist party, advocates "Third Way" - an alternative to the traditional left and right-wing politics
- Popular Unity (UP): coalition of left-wing and far-left, Marxist-communist, anti-imperialist
- Party of the People (Partido de la Gente): right-wing, populist, conservative
- Green Animalist Party (PVA): centre to centre-right, green conservatism, animal rights, direct democracy
- Workers' Party (Partido de los Trabajadores): far-left, Trotskyist, socialist
- Digital Party (Partido Digital): the party advocated for e-democracy and is against being labelled either right, centre, or left.

Type of State
The Oriental Republic of Uruguay is a constitutional republic based on parliamentary democracy with a strong presidential form of government.
Executive Power
The President of the Republic is both the Head of State and the Head of Government and is elected by universal suffrage for a five-year term. While the President may be reelected any number of times, immediate reelection is not allowed by the Constitution.
Legislative Power
Parliament is bicameral. The General Assembly is made up of the Chamber of Senators, which is composed of 30 members directly elected to serve 5-year terms; and the Chamber of Representatives, composed of 99 members directly elected to serve 5-year terms.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
18/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Uruguay please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: May 2024